The government will spend 1.5tn roubles ($53bn; £33bn) on raising the birth rate and extending life expectancy.

He announced the plan in a key speech to the Duma on the economy ahead of presidential elections in March 2012.

The prime minister has hinted he may seek to return to the presidency, but it is unclear whether the incumbent Dmitry Medvedev would make way for him.

Mr Putin, widely seen as the power behind the throne in Russia, stood down as president at the last election because of a constitutional limit on his term in office, and backed Mr Medvedev - a close political ally - as his successor.

'Unjustified liberalism'

The speech was seen as an opportunity for Mr Putin to outline his economic policies ahead of the presidential elections, as well as parliamentary elections due in December.

Analysis

By Steve RosenbergBBC News, Moscow

Vladimir Putin hasn't said whether or not he intends to run for president next year, but if he does this speech - shown live on Russian TV - will have gone down well with the public.

It was packed with positive news about economic achievements, salary and pension increases and promises of new Russian weaponry and spacecraft.

His call for Russia to be a strong country that could resist "crude interference" in its internal affairs will have struck a chord with many viewers. As will his criticism of "unjustified liberalism".

The two-hour address offered something for everyone: more modern equipment for farmers, new apartments for soldiers, higher wages for librarians, better hospitals, schools and museums.

Mr Putin didn't sound like a politician who was winding down his political career.

The prime minister positioned himself as a political hardliner, in contrast with Mr Medvedev who has presented a more liberal face and greater openness to the West during his presidency.

The Russian premier, whose government has been criticised in the West for stifling democracy, once again said that political stability was more important than liberalising too fast.

"The country needs a decade of strong, calm development, without different kinds of swings, poorly thought out experiments based on at times unjustified liberalism or, on the other hand, on social demagoguery," he said, reminding voters of the disasters of the 1990s.

Mr Putin emphasised the need for the Russian economy to diversify away from energy and mineral exports, and reduce its economic dependence on the outside world.

"The oil boom we are witnessing only underlines the need to move quickly to a new model of economic development," he said.

"Economic weakness and sensitivity to external shocks result in threats to national sovereignty.

"Let's be frank - in the modern world, if you are weak, there is always someone who will come in and unequivocally recommend which way to go, what policy to conduct, what path to choose."

In a surprise initiative, he called for "demography projects" in a country whose population has fallen 6% since the mid-90s.

"First, we expect the average life expectancy to reach 71 years," he said.

"Second, we expect to increase the birth rate by 25-30% in comparison to the 2006 birth rate."

'Strategic sectors'

Russia - which confirmed its status as the world's biggest oil producer - has been riding high on energy prices.

The prime minister said the economy had grown by 4.4% in the first quarter of the year, making it the best performer in the G8 group of major economies.

And despite his calls for a more diversified economy, Mr Putin said the recent Fukushima disaster, and the resulting backlash against nuclear energy in Europe, would only increase demand for Russian oil and gas exports.

Russia's economy in numbers

With oil revenues surging, he said the government would cut its budget deficit to 1%-1.5% this year and eliminate it altogether in the future.

To support economic development, Mr Putin advocated the lifting of barriers to foreign investment in "strategic sectors" in Russia.

He said the government aimed to attract $50bn-60bn in foreign capital in the coming years, compared with a rate of $40.5bn in 2010.

Addressing the pharmaceutical industry, he hinted that companies doing business in Russia may be required to invest more money in the country.

"We spend billions on orders of medical equipment from foreign companies," he said. "I think it's natural to state that the foreign partners would also gradually move to Russia."

An issue of concern to many voters is inflation.

Wildfires last summer sparked shortages and sharp rises in grains and other foodstuffs.

The government was closely watching the areas affected by the fires, he said, adding that inflation would not exceed 7.5% this year.